At age 40 you deposit $150 at the end of each month into an IRA that pays 4% interest compounded monthly. At age 65, what will the value of the annuity be? Round your answer to the nearest cent, and do NOT include the dollar sign. Do NOT round until you have calculated the final answer.

Question

Mathematics

Eddie Mays

26 September, 05:03

At age 40 you deposit $150 at the end of each month into an IRA that pays 4% interest compounded monthly. At age 65, what will the value of the annuity be? Round your answer to the nearest cent, and do NOT include the dollar sign. Do NOT round until you have calculated the final answer.

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Answers (1)

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Jacquelyn Kramer · Answer 1

Annuity = 242.4

Step-by-step explanation:

This is a compound interest problem.

The total amount at the end of 25 years will be

A = p (1+r/n) ^ (nt)

A = 150 (1 + (0.04 / (25*12))) ^ ((25*12) (25))

A = 150 (1 + 0.04/300) ^ (300*12)

A = 150 (1 + 0.0001333) ^ 3600

A = 150 (1.0001333) ^ 3600

A = 1500 (1.615828808)

A = 242.374

A = 242.4 to the nearest cent